By Representative Mike Yantachka
As we approach Town Meeting Day, the issue of how to fund our K-12 education system is once again in the news.
The fact that we continue to have the discussion from one year to the next indicates that it is not easy to address all the concerns regarding property taxes, budgets and services that are needed.
Moreover, the current funding system is nearly impossible for the average Vermonter to understand and for most legislators to explain. At a briefing I attended, the remark was made that the system could be simple or fair, but not both.
This year the House Ways & Means Committee decided to take a fresh look at how we fund education with an eye toward making it easier to understand while maintaining fairness in application.
Before describing the proposed changes, it is important to review the roles of the municipalities and school districts, the voters and taxpayers, and the state.
School districts decide what is needed to educate their children and put together a budget, with taxpayer input, to meet those needs. The budget is presented to the taxpayers who then either approve or disapprove it.
The state, on the other hand, is responsible for raising the money to fund all the budgets passed across the state. Today, that funding consists of 36 percent of the sales tax revenues, 100 percent of the lottery revenues, a transfer from the general fund, federal dollars, and a statewide property tax.
The burden on taxpayers is reduced by adjustments to the property tax assessments based on household income, and a fixed rate is assessed on all nonresidential property.
The new proposal, which has not yet been finalized, would keep the nonresidential rate the same, but would change the other allocations significantly. The general fund transfer would be eliminated, but 100 percent of the sales and use tax revenue as well as 25 percent of the rooms and meals tax would go to the Education Fund. The income sensitivity adjustment would be eliminated and be replaced by a direct school income tax based on adjusted gross income.
Low-income residents and property owners would continue to be assisted by creating a homestead exemption, by exempting the first $47,000 of income from the school income tax, and by retaining the renter rebate program.
Also, responsibility for several programs that do not go directly to K-12 education will be moved to the general fund. Together, these changes would reduce reliance on the residential property tax by moving to a tax that is more closely related to ability to pay and would more closely link decisions on school budgets to the actual homestead tax paid.
Finally, while the common level of appraisal adjustment would continue to be a factor on the local level (Editor’s note: It analyzes how closely local property assessments mirror actual market value), the per-pupil property tax yield would be reduced from $13,000 to about $5,000.
Since the base statewide property tax would be reduced from $1 to 25 cents, the Champlain Valley School District, which spends about $15,000 per pupil, would see an effective tax rate of $75 cents, three times the base rate.
Final details remain to be worked out, as well as a decision as to whether the new funding system will go into effect this year or next. The Legislature will continue to look for a fair, easy-to-understand funding formula that provides a quality education for all the children of Vermont. I can be reached by phone at 802-233-5238 or by email firstname.lastname@example.org.
Michael Yantachka, a Democrat, represents Charlotte in the Vermont House of Representatives.